Outlook: Big Promises for 2015

Introduction

The current portfolio of infrastructure investment projects in Latin America is the largest in decades. While many initiatives are aimed at reviving an economy that this year has grown less than expected, the plans have given rise to optimism among players in the business.

The key question is whether the current trend will mark a turning point that allows the region to overcome one of its greatest shortcomings: the poor state of infrastructure and the consequent loss of competitiveness compared to other emerging economies.

It is estimated that Latin American countries invest less in infrastructure than any other area in the world. The amount does not exceed 1.7% of GDP, or about US$100 billion a year. This figure is far from the recommendations of the UN Economic Commission for Latin America and the Caribbean (ECLAC) and multilateral agencies, which say the objective should be to invest between 5% and 7% of GDP.

The needs are certainly urgent. A largely urban population demands efficient, good quality mass transit systems; air passenger traffic that is increasing at above world average rates is exerting strong pressure on airports; fast-growing trade requires ports that adapt to the Panama Canal expansion; while the scarcity and competition for water between sectors needs to be urgently addressed.

The good news is that there are projects underway or under consideration to face these challenges. But will they materialize?

If we analyze what has happened so far this decade, we can conclude that some projects will take time, some will be modified along the way and not a few will remain bogged down in red tape or discarded altogether with the arrival of new authorities.

The lack of political will and long-term vision, along with poor planning and inefficient bureaucracy, have so far been responsible for the erratic implementation of infrastructure projects throughout Latin America.

In this report we review the new approach to public policy in infrastructure, the changes being made to public-private partnership (PPP) models and the main needs, trends, innovations and challenges posed by the development of urban and air transport infrastructure, as well as logistics and waterworks planned for the coming years.

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